hard times for bounty hunters: zenith radio corporation v

Denver Journal of International Law & Policy Denver Journal of International Law & Policy

Volume 8 Number 2 Spring Article 7

January 1979

Hard Times for Bounty Hunters: Zenith Radio Corporation v. Hard Times for Bounty Hunters: Zenith Radio Corporation v.

United States, 98 S. Ct. 2441 (1978) United States, 98 S. Ct. 2441 (1978)

Dwight C. Seeley

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Recommended Citation Recommended Citation Dwight C. Seeley, Hard Times for Bounty Hunters: Zenith Radio Corporation v. United States, 98 S. Ct. 2441 (1978), 8 Denv. J. Int'l L. & Pol'y 487 (1979).

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CASE COMMENT

Hard Times for Bounty Hunters: Zenith RadioCorporation v. United States, 98 S. Ct. 2441

(1978)DWIGHT C. SEELEY*

The long-standing doubts surrounding United Statescountervailing duties policy were recently unraveled by theUnited States Supreme Court in Zenith Radio Corporation v.United States (98 S.Ct. 2441) (1978). Eight years of adminis-trative review and judicial interpretation ended in a denial ofZenith's appeal for countervailing duties to be assessed againstimported Japanese electronic products.'

Zenith, the large Chicago-based electronics firm,' found itsoriginal complaint for assessment of duties denied by the Cus-toms Bureau of the Treasury Department. The Treasury pol-icy, backed by some eighty years of administrative precedent,requires a showing that if a foreign producer rebates taxes orfails to tax products upon export, then that rebate must be"excessive," that is, more than the item was initially taxed inthe domestic market. If such a rebate is nonexcessive, then itfails to provide the exporter an unfair competitive advantageand therefore will not trigger a countervailing duty against it.The legislative history, economic theories, and prior SupremeCourt pronouncements advanced by Zenith proved insufficientto override this longstanding Treasury policy and its reasona-bleness in light of past and present United States countervail-ing duty laws. The unanimous Supreme Court opinion conse-quently upheld the Treasury practice and the economic policythat it reflects.

* B.A., 1970, University of Wisconsin; J.D. candidate, 1980, University of Denver

College of Law.1. Television receivers, radio receivers, radio-phonograph combinations, radio-

television-phonograph combinations, radio/tape recorder combinations, tape players,record players and phonographs complete with amplifiers and speakers, tape recorders,and parts of television receivers: color television picture tubes, resistors, transformers(deflection components), and tuners for receivers with integrated circuits. 37 Fed. Reg.10,087 (1972) as amended by 37 Fed. Reg. 11,487 (1972).

2. Zenith has also been the standard bearer for the industry in litigating dumpingclaims against Japanese electronics producers. See Zenith Radio Corp. v. MatsushitaElec. Indus. Co., 402 F. Supp. 251 (1975).

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BackgroundIn the arena of world trade, a manufacturer faced with an

inelastic demand for his product may find that a decrease indomestic price will not increase demand sufficiently to coverthe loss in revenue of a price decrease. The manufacturer maywell find an elastic demand in a foreign market, where sellingat a lower price will stimulate sales and increase profits as wellas provide him market penetration. By exporting, his "profitswill be maximized by maintaining the high price at home andselling at a lower price abroad." 3 This is dumping, a practicewhich is specifically outlawed in the United States by the Rev-enue Act of 1916' and the Anti-Dumping Act of 19215 as re-cently amended by the Trade Act of 1974.

Another practice, sharing an "interlocking conceptualbasis"' with dumping is that of subsidies, usually provided bya foreign government to promote export. Typically, a govern-ment makes a political decision to bolster the economic posi-tion of a particular group of industries. Reasoning for this mayvary. Sometimes the intent is to protect a weak domestic in-dustry already glutted by competition; at other times the pur-pose is to protect the domestic economy through increased for-eign exchange earnings and a stable balance of payment posi-tion. Whatever the reason and by whatever method the govern-ment chooses to provide the subsidy, the recipient industrybecomes more competitive in the world market because of thesubsidy and not because it has produced more efficiently.7 TheCountervailing Duties provision of the Tariff Act of 19308 pro-vides statutory protection for American industries from thiskind of subsidized export. Access to the Anti-Dumping andCountervailing Duty measures has been expedited through therecently expanded concept of judicial review of negative deci-sions,9 resulting in a flurry of legal activity. The dumping stat-

3. See Meyerson, A Review of Current Antidumping Procedures: United StatesLaw and the Case of Japan, 15 COLUM. J. TRANSNAT'L L. 167, 168 (1976).

4. 15 U.S.C. § 72 (1976).5. 19 U.S.C. §§ 160-173 (1976).6. Feller, Mutiny Against the Bounty: An Examination of Subsidies, Border Tax

Adjustments and the Resurgence of Countervailing Duty Law, 1 LAw & POL'y INT'L

Bus. 17, 33 (1969).7. Butler, Countervailing Duties and Export Subsidization: A Reemerging Issue

in International Trade, 9 VA. J. INT'L L. 82, 83 (1968).8. Tariff Act of 1930, § 303, as amended by 19 U.S.C. § 1303 (Supp. IV 1974).9. 19 U.S.C. § 1516(d) (1976).

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ZENITH RADIO CORP. V. UNITED STATES

ute was applied only 77 times between 1954 and 1971, whereasroughly 65 cases were under review from 1971 to 1974.10 Themajor thrust of countervailing duty complaints in the 1960'swas directed against European Economic Community andCanadian exporters." However, the 1970's have seen Japan as-sume the position as the leading exponent of dumping. Whilecountervailing duty determinations have been more infre-quent, 2 there too the recent activity has concerned Japan, withthe case of Zenith Radio Corporation v. United States 3 provid-ing the definitive standard for determination of illegal subsi-dies."Japan, Inc."

The pressures of a growing population, racial homogene-ity, and a capacity for high productivity have created a busi-ness-image of Japan as a monolith, where government andindustry go hand-in-glove to dominate the world's industries.This image portrays the government as the economic center or"home office" with each industry a branch or division of thecorporation. Although this image tends to distort the true pic-ture, principally by minimizing the private activity of themajor corporations and the considerable competition betweenthem," there is no arguing that post-war Japan has seen aremarkable consensus of national goals where business andgovernment officials have collaborated to promote economicgrowth. ,5

With the dismantling of the huge, family-controlled corpo-rations (the zaibatsu) and the regulation of monopolistic enter-prises under the Occupation, new and independent businessinitiatives arose. From the beginning, post-war growth wasforged by a unique "participatory partnership" where the gov-ernment defined the economic priorities of the nation, and in-dustries, assisted by a variety of supports and subsidies, endea-vored to fulfill them.'" In the 1950's, the Japanese government's

10. Silbiger, Trade Act of 1974: New Remedies Against Unfair Trade Practices inInternational Trade, 5 DEN. J. INT'L L. & POL'Y 77, 80 (1975).

11. Meyerson, supra note 3, at 197.12. Butler, supra note 7, at 126.13. Zenith Radio Corp. v. United States, 98 S. Ct. 2441 (1978).14. E. Kaplan, Japan: The Government-Business Relationship 15 (1972).15. Meyerson, supra note 3, at 197.16. E. Kaplan, supra note 14, at 17. The United States Commerce Department

analogizes this relationship as one similar to the American government's creation ofthe Atomic Energy Commission (AEC) and the National Aeronautics and Space Ad-ministration (NASA). Because the U.S. government desired certain national goals and

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goals centered around the "big four" industries (coal, electric-ity, marine transportation, and iron and steel) which receivedtop priority and the largest proportion of investment funds.'7

What emerged from that experiment was a rebuilt economyand a government-industrial relationship that mutually strivesfor what the Ministry of International Trade and Industry(MITI) has called a "concerted economy":

Out of discussions between the government and private enter-prise, mutually determined national targets are worked out. Pri-vate enterprise pledges to carry these out. Government, on itsside, pledges special favors . . . such as subsidies and taxationmeasures. 8

The economic infrastructure, fueled by large scale concessionsfrom the U.S. military during the Korean and Vietnamese con-flicts, grew so rapidly that by 1964 the balance of trade betweenthe United States and Japan shifted in Japan's favor and hasgrown every year thereafter, totaling $3 billion in 1971, justafter Zenith filed its complaint. 9

The rapid expansion of the Japanese economy has notbeen entirely smooth, however, and the industrial system hasdeveloped in such a fashion that domestic troubles (such as arecession) will have international repercussions. For one, a highequity/debt ratio (20.8% versus 44% in the U.S.)20 has put acontinuing burden on Japanese industries. This, combinedwith a system of lifetime employment with a variety of em-ployee benefits, means that Japanese companies have a highlevel of fixed costs. These costs encourage a "full capacity pol-icy," which requires each industry to operate at full capacityto recover high fixed costs.2' Full capacity results in surplusproduction which will find its way abroad as exports.

In times of stress the planned oligopolistic structure func-tions poorly. Each industry has its ranking within the domesticeconomy and will receive its commensurate "market share" inimport licensing and borrowing quotas. In a rapid growth pe-

because of the large amounts of capital, high technology and high risk involved, onlythe government could successfully underwrite such projects.

17. Id. at 73, n.11.18. MITI, Industrial Research Paper #100, "A discussion of Cooperative Industrial

Organization," quoted in E. HADLEY, ANTITRUST IN JAPAN 398 (1970).19. E. Kaplan, supra note 14, at 6.20. Meyerson, supra note 3, at 198.21. Id. at 198-99.

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riod a given industry will grow and invest in production capac-ity commensurate to its market share and new enlarged creditcapacity. 22 Overproduction results when the economy falters,thus:

in times of recession or when overcapacity results from the cor-poration investing to protect its market share, the excess pro-duce is sold abroad (even dumped) by the ubiquitous tradingsibling as long as the variable costs are recovered, since high fixedcosts for debt (interest) and wages (life employment) cannot beavoided anyway.2

Consumer electronics, like coal and shipbuilding in the1950's, has been deemed a "high priority growth industry 24 inthe 1970's and no industry has been more responsive to theneed for export marketing." This responsiveness has resultedin a highly defensive stance by various U.S. industries, whichhas resulted in increased complaints and litigation. Where thedecade 1960-1970 saw only six dumping cases lodged againstJapan, aggressive sales. have catapulted that figure to thirty-two complaints during the four years from 1971 to 1975.26 Inthat regard "renewed and continued activity may be antici-pated." 27

The LawA highly competitive world sugar market aroused the pro-

tective instincts of the U.S. Congress which passed the firstgeneral countervailing duty statute under the Tariff Act of1897 .2 This act delegated to the Secretary of the Treasury thepower to determine the amount of "bounty" or "grant" bywhich a foreign government subsidized exports. The Secretarywas required to assess a duty equal to that amount. Subse-quent enactments in 1909, 1913, and 1930 altered the act onlyslightly.

The Countervailing Duty Law as it stands today provides

22. D. HENDERSON, FOREIGN ENTERPRISE IN JAPAN 157 (1975).23. Id.24. E. Kaplan, supra note 14, at 7.25. "Hitachi (a major electronics firm) has traditionally placed great emphasis on

the promotion of exports. The future development of the company's business is basedsquarely on export, and this policy is in accord with the requirements of the nation asa whole." (Emphasis added.) (1968 annual report.) Zenith Radio Corp. v. MatsushitaElec. Indus. Co., 402 F. Supp. 251, 289 (1975).

26. Meyerson, supra note 3, at 197.27. Silbiger, supra note 10, at 80.28. 30 Stat. 205 (1897).

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for the assessment of a special duty on imported merchandiseequal to the net amount of any "bounty or grant" paid"directly or indirectly" by a foreign government or other entitywith respect to the manufacture, production, or exportation ofsuch merchandise.2 The administration of section 303 of theTariff Act of 1930 lies with the Treasury Department"0 whichdelegates its authority to the Commissioner of Customs.3'Where investigation shows that a "bounty or grant" exists ondutiable merchandise, the Commissioner is required to assessa countervailing duty.32

Anyone can invoke the Countervailing Duty Law althoughit is a domestic producer who generally initiates the investiga-tion.u If the Commissioner fails to find a bounty and conse-quently makes no assessment, the U.S. manufacturer, produ-cer, or wholesaler may contest the no-bounty determination inthe United States Customs Court.Y Failing there, an appealmay be filed with the United States Court of Customs andPatent Appeals,5 and the Supreme Court may grant certior-ari.3 The impact of the Trade Act of 1974 was to extend toAmerican manufacturers the right to contest a no-bountydetermination; conversely, foreign producers had rights to ajudicial review of an assessment from section 514 of the TariffAct of 1930. 3

Although in existence for better than eighty years, theCountervailing Duty statute has been difficult to apply. Nostatutory language within the law defines what constitutes a"bounty or grant." Nor do the implementing regulations shedany light.38 Of the two Supreme Court cases before Zeniththat had taken countervailing duty assessments on review, 39

29. 19 U.S.C. § 1303(a) (1976).30. Except for duty free merchandise which will be reviewed by the International

Trade Commission. The standard applied there is consistent with a dumping stan-dard-that the item has caused "injury" to a U.S. industry. 19 U.S.C. § 1303(b) (1976).

31. 19 C.F.R. § 159.47 (1977).32. 19 U.S.C. § 1303 (1976).33. W. STERLING & D. WALLACE, A LAwYER's GUIDE TO INTERNATIONAL BusiNESs

TRANSACTIONS 132 (2d ed. 1977).34. 19 U.S.C. § 1516(d) (1976).35. 28 U.S.C. § 2601 (1976).36. 28 U.S.C. § 1256 (1976).37. 19 U.S.C. § 1514 (1976).38. 19 C.F.R. § 159.41-47 (1977).39. Downs v. United States, 187 U.S. 496 (1903); and Nicholas v. United States,

249 U.S. 34 (1919).

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neither had been explicit enough in its definition to provide re-liable precedent for either subsequent court decisions or com-mentators." A wealth of legislative history can be called uponto support either the position that a "bounty" means only anexcessive remission or the contrary position that any remis-sion constitutes a bounty. Also, the Customs Court in Zenithv. United States" accepted the Downs holding as a viableprecedent, while the Court of Customs and Patent Appeals,with two dissents, ruled to the contrary. 2

The Tax

The difficulty in deciding whether an indirect tax exemp-tion or remission of the type complained of in the Zenith caseis a bounty or grant lies in the nature of indirect taxes gener-ally. In Zenith the tax was a "single stage consumption tax' 3

levied on goods at the manufacturing level. The tax emanatesfrom the Japanese Commodity Tax Law (March 31, 1962, LawNo. 48) which sets a consumer tax on items such as televisionsets." It also provides that previously paid taxes on exemptproducts (e.g., exports) are refunded.'5 As such it is merely anexcise or consumer-type indirect tax, not unlike those of theUnited States, some of which are remitted upon export."

The classical theory of taxation holds that indirect taxesdiffer from direct ones in that direct taxes (production andmaterials taxes, income taxes, etc.) will be absorbed by themanufacturer whereas indirect taxes are fully shifted forwardto the consumer in the price of the product. It is thought thata seller will raise his prices by the equivalent amount of hisindirect tax burden, and the consumer becomes the de factotaxpayer." If the tax were not rebated on export, the ex-ported product would be taxed by the exporting country and

40. See e.g., that the Supreme Court definition of "bounty" in the Downs caseis dictum: Butler, supra note 7, at 119; and Feller, supra note 6. But see, e.g., thatthe bounty definition is a holding: American Express v. United States, 332 F. Supp.191, 197-99 (Cust. Ct. 1971); and King, Countervailing Duties-An Old Remedy withNew Appeal, 24 Bus. L. 1179, 1182-83 (1969).

41. Zenith Radio Corp. v. United States, 430 F. Supp. 242 (Cust. Ct. 1977).42. United States v. Zenith Radio Corp. 562 F. 2d 1209 (C.C.P.A. 1977).43. 430 F. Supp. at 242.44. Way, Brockman & Otsuka, 51-6th T.M., Business Operations in Japan A-44

(1978). On television sets the tax is 15%.45. Id.46. 26 U.S.C. §§ 4221(a)(2), 6416(b)(2)(A) (1976).47. Feller, supra note 6, at 51.

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the importing country, making it noncompetitive when mar-keted against the importing country's product."5 Both theGeneral Agreement on Tariffs and Trade (GATT) and theTreasury Department/Customs Bureau are apprised of this po-tential double taxation. Both hold that a countervailing dutywill not be imposed merely because the exporting country hasrebated a domestic tax upon export of the product. In fact, ifthe principles of GATT had been applied to the Zenith case,there would have been no appeal since the statutory languageof GATT (in Article VI(3)) makes it clear that neither theexemption nor the refund of an indirect tax by the exportingcountry will trigger a countervailing duty. " However, ArticleII of GATT recognizes the superiority of prior inconsistentdomestic legislation under the protocol arrangement. 0 Thus,since the Tariff Act's Countervailing Duty provision precedesGATT, it is the interpretation of that statutory language alongwith the Supreme Court decisions that provide the resolutionto the Zenith case.

The above analysis of indirect taxes is no longer absoluteunder the modern view, which holds that the forward shiftingon indirect taxes is incomplete. Thus a $100 production-costJapanese television which is assessed at 15% tax would sell for$115 in Japan if the tax were fully shifted forward. However, ifthe producer sold the item for $110 in the foreign market, the$15 he would receive in remitted tax from exporting his productwould be in excess of his indirect tax liability by $5 per unit.Thus, his exports would be subsidized by the government taxremission. In response to the above situation, the U.S. positionhas been that a countervailing duty will be imposed to theextent that the rebated, indirect tax is not shifted forward inthe cost of the item. 51

Since Zenith was neither argued from a factual tran-script,52 nor did it evidence the extent to which the Japanesetax was shifted, no economic guidelines were set by any of the

48. See generally ExEcuTivE BRANCH GATT SlTrDis, SENATE CoM&rrrFN ON

FINANCE, 93rd Cong., 2d Sess., 17-18 (1974).49. The General Agreement on Tariffs and Trade (GAIT), Oct. 30, 1947, 61 Stat.

A24, T.I.A.S. No. 1700, 55 U.N.T.S. 187.50. The "grandfather clause." Protocol of Provisional Application of the General

Agreement on Tariffs and Trade, Oct. 30, 1947, art. 1(b), 61 Stat. A 2051, T.I.A.S. No.1700, 55 U.N.T.S. 308.

51. Butler, supra note 7, at 116.52. The Customs determinations generate no formal hearing record.

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three courts which heard the Zenith case. It is safe to say,however, that the weight of modem authority supports thetheory that indirect taxes are not fully shifted forward anddirect taxes are not fully shifted backward." To the degree thatan indirect tax is even partially shifted backward (that is, ab-sorbed by the manufacturer) a full refund of an indirect taxbecomes a subsidy for exports. 54 Also, there is no generallyagreed-upon method for determining the degree of discrimina-tion that results from this indirect/direct tax problem." Com-plex economics, coupled with the divergent goals and methodsof economists, have caused the courts to adopt neither of thesecompeting points of view. This is not to say that the courts arenot aware of these complexities. There are ample indicationsthat both the Court of Customs and Patent Appeals" and theSupreme Court" are fully apprised of the negative commentarydirected against the economic principles on which the Treasuryhas based its policy.

Zenith Radio Corporation v. United States (430 F. Supp. 242)(1977)

The Zenith case shows the countervailing duty determi-nation procedures through each stage of review. Zenith RadioCompany first petitioned the Treasury Department in 1970,alleging that the remission of the Japanese Commodity Tax (onvarious consumer electronic items) constituted a bounty orgrant and asked for an imposition of countervailing duties. TheCustoms Bureau began an investigation and solicited informa-tion from all parties, which ultimately resulted in publicationof preliminary findings on February 5, 1975.58 The notice distin-guished three export-inducing programs under which "benefitshad been received" which constituted "bounties or grants"within the meaning of section 303 of the Tariff Act. The Com-missioner of Customs further stated that the amounts consid-

53. Rosendahl, Border Tax Adjustments: Problems and Proposals, 2 LAW & POL'YINT'L Bus. 85, 109 (1970). See also K. DAM, THE GATT-LAw AND INTERNATIONALECONOMIC ORGANIZATION, 214 (1970).

54. Rosendahl, supra note 53, at 110; and K. Dam, supra note 53, at 215.55. Rosendahl, supra note 53, at 112. See also, McNamara, Tax Adjustments in

International Trade; The Border Tax Dispute, 3 J. MAR. L. & COM. 339, 361 (1972).56. 562 F. 2d 1209, 1219 n. 19.57. 98 S. Ct. 2441, 2449 n, 14.58. See 37 Fed. Reg. 10,087 (1972) (notice of proceedings) and 40 Fed. Reg. 5,378

(1975) (preliminary determination).

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ered were de minimis, that is, not excessive and therefore notto be countervailed. Because the program providing the bene-fits was available to firms capitalized at less than one billionyen, the Commissioner prolonged the investigation in order todetermine whether "significant" benefits would accrue to a fewsmaller firms. On January 7, 1976, a final negative determina-tion was made.5 The findings showed that two export-inducingprograms had been abandoned by the Japanese government.The third involved an aggregate amount considered de minimisper dollar value of the exported product. Thus, no countervail-ing duty was assessed.

Zenith chose to contest the determination, resulting in aplea before the Customs Court for a summary judgment on thematter. 0 Plaintiff Zenith, arguing directly from Downs v.United States, said that the Supreme Court's decision as wellas that of special customs tribunals had repeatedly held that aremission of taxes on exportation constituted a bounty or grant.They buttressed this argument with reference to the legislativehistory of section 303. The defendant averred that the counter-vailing duty provision was intended to apply only to "excessiveremission of taxes directly related to the imported product."'"Furthermore, because the Congress had been apprised of theTreasury practice (countervailing only "excessive" remis-sions), this amounted to a legislative approval of the adminis-trative practice."

The court found for plaintiff Zenith and ordered the Secre-tary of the Treasury to assess countervailing duties equal to the"net amounts of bounty or grant paid or bestowed. '6 3

The court's reading of the 1903 Downs case is at the centerof the argument. In Downs the Supreme Court addressed itselfto a tax rebate on sugar exported from Russia. Exporters werenot only relieved of the 1.75 rubles per pood 4 domestic excisetax, but received a certificate upon export. This certificatecould then be sold to other sugar producers entitling them tothe same excise rebate on sugar they sold domestically. The

59. 41 Fed. Reg. 1,298 (1976).60. 430 F. Supp. at 242.61. Id. at 244.62. Id. at 243.63. Id. at 265.64. 36.113 pounds avoirdupois. T.D. 22,814, 4 TRAS. DEc. 184 (1901).

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critical language of the Supreme Court's decision was straight-foward:

[Tiwo facts . . .appear clearly . . . that no sugar is permit-ted to be sold in Russia that does not pay an excise tax of R. 1.75per pood, and that sugar exported pays no tax at all. . . . Whena tax is imposed upon all sugar produced, but is remitted uponall sugar exported, then, by whatever process, or in whatevermanner, or under whatever name, it is disguised, it is a bountyupon exportation."

The unequivocal language, taken literally, supports theCustom Court's reading. However, it remains unclear whetherthe Court in Downs condemned the mere excise remission orwhether the sugar certificate was the object of the countervail-ing duty. The literal reading was cited in a subsequent (1903)Board of General Appraisers (predecessor to the CustomsCourt) decision and in a House Ways and Means Committeedocument (1908) where it was understood to mean that anexcise remission on exported goods was a bounty.16 However,the Secretary of the Treasury never interpreted Downs in thatfashion and subsequent determinations have consistently de-nied that a tax remission on exports is always a bounty.United States v. Zenith Radio Corporation (562 Fed. 2d 1209)(1977)

The United States Court of Customs and Patent Appeals,in a case the majority called "first impression," would not ac-cept the Customs Court's reading of Downs and reversed thedecision. The lower court's reading, said the majority opinion,was to take the straightforward language of the Downs decisionout of the context of the facts-that there was a dual benefitin the Russian remission-and-certificate scheme. The originalBoard of General Appraiser's opinion had noted the combina-tion of the two benefits. The Board and the appellate courtswere faced with a "decision resting not on either of two inde-pendent grounds but on a single ground having at least two im-portant elements.""8 Therefore, there was no need for thecourt to decide whether a nonexcessive remission was a per se

65. 187 U.S. at 515.66. 430 F. Supp. at 245.67. Butler, supra note 7, at 120 n. 188. The Secretary interpreted the Downs case

as requiring a refund plus something else of cash value in order to trigger countervailingduties.

68. 562 F. 2d at 1213.

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498 JOURNAL OF INTERNATIONAL LAW AND POLICYV

bounty or grant. In the context of the entire opinion, then, thestrong language cited by the Customs Court was not necessaryto the decision and was not the ratio decidendi.6 1 Additionalfindings of the majority included: (1) that Congress has notrequired that every remission constitute a bounty, as demon-strated by the refusal to define "bounty" or "grant" in thestatute; (2) that while legislative history can be cited for eitherposition, there is nothing to indicate a congressional intentthat countervailing duties be imposed in response to "non-excessive remissions";" and (3) that a long-continued admin-istrative practice is entitled to great weight, particularly whenCongress has failed to revise the statute while on notice of theadministrative practice."

That Congress has acquiesced to the administrative prac-tices of the Treasury was, in the opinion of dissenting JudgesMiller and Baldwin, a myth. Moreover, (1) the case was not oneof first impression because the key language has been dealtwith by the Supreme Court before; (2) the interpretation of theCourt in Downs was holding, not dictum; and (3) judicial inter-pretation prevails over any long-continued administrativepractice.7

As the Customs Court decision had done before, the dis-senters zeroed in on the unequivocal language cited in Downsbut referred to by the majority as "unnecessary." To bolsterthe argument that either the remission or the certificate wouldclassify as a bounty the dissenters quote the language in theDowns decision referring to the export certificate as anadditional bounty:

If the additional bounty paid by Russia upon exported sugar werethe result of a higher protective tariff upon foreign sugar, and afurther enhancement of prices by a limitation on the amount offree sugar put upon the market, we should regard the effect ofsuch regulations as being simply a bounty on production, al-

69. Id. at 1215.70. Id. at 1217.71. The government argued that if the Downs case held as Zenith claimed it did,

the Secretary's interpretation nevertheless emerged supreme. Because the Secretarydid not change his interpretation after either the Downs or Nicholas cases and becauseCongress-with full knowledge of the Secretary's practice-continued to re-enact thestatute without substantive change, Congress in effect "overruled" Downs andNicholas insofar as they conflicted with the Secretary's practice. Reply Brief for Appel-lant at 6-7, United States v. Zenith Radio Corp., 562 F. 2d 1209 (C.C.P.A. 1977).

72. 562 F. 2d at 1223.

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though it might incidentally and remotely foster an increasedexportation of sugar; but where in addition to that these regula-tions exempt sugar exported from excise taxation altogether, wethink it clearly falls within the definition of an indirect bountyupon exportation.7 3 (Emphasis added.)

The dissenters concluded that both the remission and thecertificate were bounties. Also referred to is the definition pro-vided by the Supreme Court itself in the 1919 countervailingduty case Nicholas & Co. v. United States. There, bountieswere determined to have been granted on whiskey and gin ex-ported from Great Britain and countervailing duties were as-sessed. In interpreting the relevant statute the Court wrote:

If the word "bounty" has a limited sense the word "grant" hasnot. A word of broader significance than "grant" could not havebeen used. Like its synonyms "give" and "bestow" it expresses aconcession, the conferring of something by one person on another.And if the "something" be conferred by a country "upon theexportation of any article or merchandise" a countervailing dutyis required . ..

In the Nicholas case as well as other subsequent decisions7 5

the courts relied on the broad language used in Downs to justifyassessment of duties. Likewise, the majority in the Court ofCustoms and Patent Appeals was mindful of the "subsequentreferences to broad statements"76 made in Downs. Neverthe-less, the majority was not swayed by this line of interpretation.The court's decision left to the Secretary of the Treasury that"lawfully permissible ' 7 discretion which the Secretary hasexercised since-and perhaps despite-the Downs decision.Zenith Radio Corporation v. United States (98 S. Ct. 2441)(1978)

The Supreme Court decision wholly embraced the think-ing of the C.C.P.A. majority on the three contested issues: (1)the correct interpretation of the statutory language and legisla-tive history of section 303; (2) the Downs holding; and (3) theeconomic effects of the remission of the Japanese tax. As theSupreme Court's findings parallel those of the C.C.P.A. on

73. 187 U.S. at 513.74. Nicholas & Co. v. United States, 249 U.S. at 39.75. See, e.g., American Express Co. v. United States, 332 F. Supp. 191 (Cust. Ct.

1971), aff'd on other grounds 472 F. 2d 1050 (C.C.P.A. 1973).76. 562 F. 2d at 1215.77. Id. at 1223.

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both law and policy, the lower court's decision is unanimouslyaffirmed.

The opinion of Justice Marshall clearly delineates twoprinciples that govern the Court's thinking. First, because ofthe long-standing Treasury interpretation of the statute andcongressional "acquiescence" to this interpretation, theC.C.P.A. had correctly affirmed the interpretation as "lawfullypermissible"" within the language of section 303. Second,the Court found no rule emanating from Downs which explic-itly decided the question whether "nonexcessive remission oftaxes, standing alone, would have constituted a bounty onexportation."79 The Court went on to rule on a third issue, thatthe Treasury's interpretation was "reasonable" in light of the-"economic result" of the Japanese tax remission. Actually, aspetitioner Zenith had based its cause of action squarely on itsinterpretation that Downs declared a tax remission, uponexportation, as a per se bounty or grant, this third issue as tothe reasonableness or arbitrariness of the Treasury policy wasnever put into contention."0 The fact that the Supreme Courtsought to identify it (as had the C.C.P.A.) as fundamental tothe resolution of the issue, shows that the decision also hadstrong roots in economic policy.Statutory Interpretation

The Court noted that the Treasury had adopted its inter-pretation of the 1897 statute the following year and that thatinterpretation has been both unchanged and consistent in ap-plication since that time. Such a long-standing statutory inter-pretation by an administrative agency is entitled to"considerable weight." 2 That interpretation has "particularweight" when the administrative practice involves a''contemporaneous construction of a statute" by those"charged with the responsibility of setting its machinery inmotion. 83 Additionally, as the Department's interpretation

78. Id.79. 98 S. Ct. at 2451.80. Brief for the United States in Opposition at 11 n. 9, Zenith Radio Corp. v.

United States, 98 S. Ct. 2441 (1978).81. May 6, 1898 in T.D. 19321, 1 Synopsis of Decisions 696 (1898). See Brief for

the United States in Opposition at 6 n. 4.82. Udall v. Tallman, 380 U.S. 1, 16 (1965), quoting Unemployment Compensa-

tion Commission v. Aragon, 329 U.S. 143, 153 (1946).83. Norwegian Nitrogen Products Co. v. United States, 288 U.S. 294, 315 (1933);

see, e.g., Power Reactor Co. v. Electricians, 367 U.S. 396, 408 (1961).

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was "sufficiently reasonable," it was acceptable to a reviewingcourt."4 In summary the Court finds:

Our examination of the language, the legislative history, and theoverall purpose of the 1897 provision persuades us that the De-partment's initial construction of the statute was far from un-reasonable; and we are unable to find anything in the eventssubsequent to that time that convinces us that the Departmentwas required to abandon this interpretation .5

Petitioner Zenith's claim that the statute is clear and unambi-guous by a plain meaning approach to the language is implic-itly rejected by the Court's broader view of the legislative activ-ity that forged the statute.Legislative History

The Marshall opinion zeroed in on two critical periods inthe murky legislative history of this act. The first target ofanalysis concerned the subtle changes brought about when thefirst act, an exclusively sugar-protecting provision in 1890, '

was expanded to cover general imports in 1897. While no defi-nition of "bounty or grant" was provided by any of the mea-sures as enacted, there is evidence that supporters7 of the mea-sure intended to countervail only against "net" bounties(where monies rebated upon export exceeded the domestic ex-cise tax). Such subsidization schemes were then practiced by"several" European governments. 8 This concept was moreexplicitly covered in the 1894 Act which excepted Americanimporters from duties on bounty-fed exports where those im-porters could produce a certificate from the exporting govern-ment that "no indirect bounty has been received upon saidsugar in excess of the tax collected upon the beet or cane

84, Train v. Natural Resources Council, 421 U.S. 60, 75 (1975).85. 98 S. Ct. at 2445.86. Tariff Act of 1890, 26 Stat. 584.87. Appellant U.S. Government maintained in its reply brief before the C.C.P.A.

that "Statements of sponsors are to be accorded substantial weight in the interpreta-tion of a statute." Reply Brief for Appellant at 4, United States v. Zenith Radio Corp.,562 F. 2d 1209 (C.C.P.A. 1977). The Government advanced a similar argument beforethe Supreme Court. Brief for the United States in Opposition at 11 n.8, Zenith RadioCorp. v. United States, 98 S. Ct. 2441 (1978). This point was contested by Zenith, butthe Supreme Court did not address it in the opinion. Instead, the Court relied onstatements made by both sides in the floor debates insofar as both sides were in accordas to the amounts of countervailing duties discussed. This obviated the need to relyon the sponsor's intentions.

88. 98 S. Ct. at 2446.

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from which it was produced."'" (Emphasis added.) Althoughthe same provision was not incorporated into the 1897 Act,the term "net amount of such bounty or grant" 0 was incor-porated. By that phrase the concept of "net bounty" wastransposed from the 1894 to the 1897 Act, and in so doing theintent was "to incorporate the prior rule that nonexcessiveremission of indirect taxes would not trigger the countervailingrequirement at all.""

Second, the Court studied the Senate floor debates sur-rounding the passage of the 1897 Act. The Senate debate makesclear the intention to countervail only against excess remis-sions and provides an illustration of the concept through aGerman export scheme then under scrutiny. The House versionof the 1897 Act had in fact utilized explicit language concerningcountervailing against only "net" bounties on exported sugar.That language was deleted in the Senate (and final) versionbecause the Senate wished to expand the coverage of the actto all imports, not merely sugar." The offending Germanscheme concerned a "bounty" on exported raw and refinedsugar. The "bounty" figures used in the debates were 38t perhundred pounds of refined sugar and 27t per hundred poundsof raw sugar. Consequently, the countervailing duties underdiscussion were in the same amounts. But the crucial fact re-vealed in the debates was that the full amount remitted fromdomestic consumption tax upon export from Germany was$2.16 per hundred pounds. It follows from this discrepancy thatthe figures of 38 and 27 cents must have been what the Treas-ury had determined to be the "excess" or "net" bounty; other-wise if remission of the entire indirect tax were regarded as the"bounty," the necessary duty would have to have been the full$2.16.11

Downs RevisitedUltimately, the resolution to the Zenith case rests upon

the Downs decision. The Court acknowledges that "this wouldbe a very different case"9" if the Secretary's interpretation were

89. Paragraph 182 V2 of the Act of August 27, 1894. Tariff Act of 1894, 28 Stat.521.

90. Section 5 of the Tariff Act of July 24, 1897, 30 Stat. 205.91. 98 S. Ct. at 2446.92. 30 CONG. REc. 1635 (1897).93. 98 S. Ct. at 2447.94. Id. at 2449.

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contrary to the Court's holding in Downs.

The facts in that case revealed two relevant tax adjust-ments: (1) the remission of excise taxes on sugar exported fromRussia, and (2) receipt of a valuable certificate upon export,this certificate relieving the exporter of excise taxes on hissugar sold domestically. The issue that came before the DownsCourt was whether a nonexcessive remission of indirect taxtogether with the granting of an additional benefit (the certi-ficate) constituted a "bounty or grant.' 5 Because petitionerDowns, the importer, did not challenge the amount of the dutyassessed on the sugar by the Treasury, the Court's attentionwas not concentrated on the distinction between the mere re-mission of the tax and the certificate. Thus, Zenith arrived atcourt arguing that a mere remission alone was sufficient totrigger a countervailing duty. They bolstered their argumentwith the same broad language used in Downs that had provenpersuasive in the Customs Court."

The modern Court finds this passage wholly incompatiblewith language in Downs both preceding and subsequent to thegeneral language in Downs. The Downs Court understood the"bounty" to refer to the certificates, as had the Board ofGeneral Appraisers 7 and the Fourth Circuit Court of Appeals"before it. The Downs Court, equally concerned with the"economic effect" of the disputed activity as the modemCourt, noted:

"The amount he [the exporter] receives for his exportcertificate, say, R. 1.25, is the exact amount of the bounty hereceives upon exportation, and this enables him to sell at aprofit in a foreign market."" (Emphasis added.) Further, theDowns Court went on to specifically concur with the conclusionof the Fourth Circuit, which it incorporated verbatim into itsown opinion:

We find that the Russian exporter of sugar obtains from his gov-ernment a certificate, solely because of such exportation, whichis worth in the open markets of that country from R. 1.25 to R.1.64 per pood, or from 1.8 to 2.35 cents per pound. Therefore we

95. Id. at 2450.96. See note 65 supra.97. T.D. 22,984, 4 TnA~s. DEC. 405, 410-11,413 (1901).98. Downs v. United States, 113 Fed. 144, 145.99. Downs v. United States, 187 U.S. 496, 515.

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hold that the government of Russia does secure to the exporterof that country, as the inevitable result of its action, a moneyreward or gratuity whenever he exports sugar from Russia.N

The occurrence within the same page of the same opinionof statements that have given rise to legal arguments for theopposing sides in the Zenith case is what makes Downs an"admittedly opaque opinion."''1 Nevertheless, the weight ofthe evidence does not allow the modern Court to take the broadstatements relied upon by Zenith as the holding of the Downsdecision. Because no one argued in Downs that a mere remis-sion by itself constituted a bounty, and because the Court didin fact support the Secretary's decision countervailing only asagainst the excess remission,102 the Court finds that "the iso-lated statement in Downs relied upon by petitioner cannot bedispositive here.' '0 3

Economic EffectsBoth petitioner Zenith and respondent U.S. Government

supported their legal points with economic and policy argu-ments. The Court was much less definitive in its discussion ofthese issues than in its clean-cut resolutions to the interpreta-tion of the legislative history and the Downs holding. While theCourt did not deny the validity of Zenith's position, it did notalter its affection for the reasonable nature of the Treasurypolicy.

The main thrust of Zenith's economic argument was thatthe Treasury policy is based on outdated economic theorywhich favors foreign tax structures. The Supreme Court ac-knowledged that remissions of indirect taxes may be in fact anincentive to export.1'0 Additionally, such remissions as sanc-tioned by GATT may work to the detriment of those countriesrelying primarily on direct taxes (as the United States) and tothe advantage of those dependent on indirect taxes (as Japan).Thus, where indirect taxes are a primary revenue source, for-eign exporters "are able to receive tax rebates on exportationfar greater than U.S. exporters, without fear of countervailingunder either the GATT rules, or the countervailing duty law as

100. Id. at 516.101. 98 S. Ct. at 2450.102. T.D. 22,814, 4 TxAs. Dac. 184 (1901). The final sums assessed against the

Russian sugar ranged from .38 ruble per pood to .50 ruble per pood.103. 98 S. Ct. at 2451.104. Id. at 2449.

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it traditionally has been construed by the Treasury Depart-ment."' 5 The possible competitive advantage gained by foreignproducers has been fully debated in Congress. Legislative dis-satisfaction with present policy has resulted, inter alia, in someprotectionist language from the Senate Finance Committee' 6

and promulgation of Section 121(a) (5) of the Trade Act of 1974,which mandates presidential action on a revision of GATTarticles "with respect to the treatment of border adjustmentsfor internal taxes to redress the disadvantages to countriesrelying primarily on direct rather than indirect taxes."'0 7

Although cognizant of the dissatisfaction, the Court bows tothe complexity of the economic situation and states that "giventhe present state of economic knowledge" it would be difficultto measure the effect of the remission of indirect taxes.0 8 Nordoes the Court think it wise to substitute its judgment for thatof the Secretary in economic matters.' Clearly the Court feelsthe economics of the issue are too nebulous for judicial resolu-tion and therefore does not defeat Zenith's arguments so muchas side-step them.

Economics aside, the Court feels the successful applicationof the Treasury policy over eight decades has been reasonable.That policy has sought to analyze a tax remission or othersubsidy in terms of its economic effect on the United States.The policy is best encapsulated in the C.C.P.A. analysis:"Neither form nor nomenclature being decisive in determiningwhether a bounty or grant has been conferred, it is the eco-nomic result of the foreign government's action which con-trols."" 0 In fact, the analysis is a balancing test; measuring theeffect of the offending practice against the purpose of counter-vailing duty legislation. Indeed the history of judicial review ofcountervailing duty cases contains both of these themes."'

105. Marks & Malmgren, Negotiating Non-tariff Distortions to Thade, 7 LAw &POL'Y INT'L Bus. 327, 352 (1975).

106. "[T]he United States can no longer stand by and expose its markets, whileother nations shelter their economies . . . with . . . export subsidies . ; . and a hostof other practices which effectively discriminate against U.S. trade and production."S. REP. No. 1298, 93rd Cong., 2d Sess. 19 (1974).

107. Trade Act of 1974, § 121(a)(5), adding 19 U.S.C. § 2131. See generally, Marks& Malmgren, supra note 105, at 354-355.

108. 98 S. Ct. at 2449.109. Id.110. 562 F.2d at 1216.111. See, e.g., T.D. 22,984 at 414; and Downs, 187 U.S. at 514-515.

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The modern Court notes that while the legislative historymight not be such as to compel a Treasury policy against only"net" bounties, there is no question of the reasonable natureof the policy "in light of the statutory purpose.""' The statu-tory purpose of countervailing duties is to control and negatethe competitive advantage gained through export subsidiza-tion. In holding that nonexcessive remissions of indirect taxesdid not sponsor the competitive advantage that the legislationwas enacted to prevent, the Treasury acted "in accordancewith the shared assumptions of the day as to the fairness andeconomic effect of that practice." ' Thus the Secretary's pol-icy, based on assumptions still current if not fully subscribedto by all observers, remains as permissible today as it was in1898.The Future of Countervailing Duty Policy

The immediate effect of the Supreme Court decision istwofold: (1) to lend judicial sanction to the "lawfully permissi-ble" countervailing duties policy of the Treasury Department,and (2) to distinguish Downs as not holding that all remissionsof indirect taxes are bounties or grants. While the latter resultwould certainly deny future petitioners their strongest legalprecedent in cases with similar facts, it does not necessarilyfollow that countervailing duty complaints will decrease. In-deed, as the last decade has seen a marked increase in counter-vailing duty reviews, there is the strong likelihood that thecombination of economic pressures and the increased accessi-bility of the courts will result in a commensurate upsurge inlitigated complaints. This trend may focus needed light onthe Treasury's review procedures, which have often beencriticized for delay and secrecy.

The Zenith case was a pointed illustration of agency foot-dragging. Eight years elapsed between the filing of Zenith'scomplaint and the rendering of the Supreme Court decision;nearly six years was spent in administrative investigation andreview. Fortunately, Congress addressed that situation directlyin the Trade Act of 1974 while Zenith was still under review.The Secretary of the Treasury is now obligated to decide if a

112. 98 S. Ct. at 2448.113. Id.

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foreign country has bestowed a bounty or grant within twelvemonths of the filing of a complaint."'

Certain to come under renewed scrutiny is the wide rangeof Treasury discretion, uninhibited by the need to produce afactual record to justify bounty or no-bounty determinations.As it stands today, when the Treasury imposes or denies acountervailing duty claim, only the fact of the bounty or grantis published along with the amount assessed against it, if any.As noted by the C.C.P.A., this profoundly circumscribes judi-cial review as there are no transcripts from which a reviewingcourt can determine whether the Secretary's findings were sup-ported by the evidence or if they were in fact arbitrary or capri-cious. The Administrative Procedure Act"5 allows for such areview and Congress does provide for hearings in antidumpingcases,"' but in countervailing duty review the Treasury is notreached by either."7 This deficiency leads to the incongruoussituation faced by the C.C.P.A. in the Zenith case where itacknowledged, on the one hand, that it is the economic effectsof a foreign government's action that determine whether asubsidy has been bestowed, and on the other hand, that in theZenith case "the record is silent regarding the economic resultof the mere remission of the Japanese Commodity Tax.""' Thissays, in effect, that the court maintains a standard of judgmentbut receives no facts to apply to the standard. In the Zenithcase, the C.C.P.A. presumed"9 that the economic result of theJapanese tax did not confer a subsidy, and then went on todecide whether the Treasury policy was justifiable as a matterof law. Faced with the same lack of data, the Supreme Courtmerely notes that the debate over the economic effects of remit-ted indirect taxes is far from over, 20 and faced with the com-plexity of the issues it is "not the task of the judiciary to substi-tute its views as to fairness and economic effect for those of theSecretary."'' It would seem improbable that this "it's-fair-because-the-Secretary-says-it's-fair" reasoning will stand

114. Trade Act of 1974 § 331(a), adding 19 U.S.C. § 1303(a)(4).115. 5 U.S.C. § 551-559 (1976).116. 19 U.S.C. § 160(d) (1976).117. 562 F.2d at 1216, n.13.118. Id. at 1216.119. Id.120. 98 S. Ct. at 2449.121. Id.

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without challenge. Such a challenge would likely emerge in thesituation where a complainant wished to contest the datawhich forms the basis of the final judgment whether a remis-sion was "excessive" or not.

From the point of view of a prospective litigator, Zenithprovides little guidance to the standard of what constitutes abounty or grant. True, this very definition is a major policydecision and should be the responsibility of congressional leg-islation and executive (Treasury) interpretation and applica-tion. However, as Congress has avoided a fixed definition,and the facts and pleadings of the Zenith decision are hazy asto how the Treasury determinations are made, it would followthat it is the responsibility of the courts to provide some stan-dards against which the petitioner can measure his chances forsuccessful review.

On the other hand, it can be strongly argued that the effectof an arbitrary standard defined by statute would be detrimen-tal to U.S. trading flexibility. This line of reasoning wouldallow the Treasury the widest discretion possible in its determi-nations so as to strike a better balance between the changingeconomics and politics of international trade and U.S. inter-ests. The judicial support that the Zenith decision lends to theTreasury's practices has at its base a very compelling policyrationale. The entire countervailing duties area is underminedby a haunting specter, which like the Treasury policy is a leg-acy of 1898-the fear of economic retaliation leading to a pro-tective tariff war.

Because the imposition of countervailing duties is requiredby the statute upon a finding of a bounty or grant; becausethere need be no factual showing of "injury" to a domesticindustry; and because judicial review is subject to the afore-mentioned limitations, some would view the imposition ofcountervailing duties as a "sleeping giant"'' 22 with a dangerouspotential to disrupt the flow of world trade. In a 1971 counter-vailing duties case the C.C.P.A. cautioned: "Countervailingduties are strong medicine, well calculated to arouse violentresentment in countries whose trade practices are branded by

122. Davis, The Regulation and Control of Foreign Trade, 66 COLUM. L. REV. 1428,1446 (1966).

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the court as unethical.' 23 The desire to avoid incitement of"violent resentment" from one of America's foremost tradingpartners is the overriding theme of the government's policyarguments in Zenith. In its brief before the Supreme Court, thegovernment urged the Court to view the facts and policies inthe same light as the Secretary in order to avoid a "significantbreakdown" in American trading relations and "retaliatoryactions" from trading partners. It also pleaded for favorablereview so as not to undermine the government's "negotiatingflexibility" in the 1978 Multilateral Trade Negotiations (underthe auspices of the GATT).124 Additionally, any decision whichwould encourage a wider application of countervailing duties(in response to a worsening balance of payments deficit or im-port glut) as has been predicted" 5 would certainly be contraryto the spirit and language of GATT and likely put a severestrain upon that system. 2 ' There is a strong inference to bedrawn from the decision in the Zenith case that a factor in theCourt's approval of the Treasury practice was the Secretary'srestraint in applying the duties pursuant to the congressionalgrant of the discretion to determine what constitutes a bountyor grant. It is for this reason that "bounty" or "grant" have nostatutory definition, indicating Congress' intent to refrain"from calling all the countervailing duty plays in advance."'Conclusion

In refusing to grant Zenith's request for reversal of a nega-tive determination on Japanese electronic goods, the SupremeCourt has established two significant guidelines. Future com-plainants who contest a no-bounty determination will no longerhave the broad language of the Downs decision to cite as pre-cedent. Also, potential litigators are on notice that the Treas-ury policy that refuses to assess duties against nonexcessiveremissions has been given full approval by a unanimous Court.What remains to be clarified is a Treasury standard for"bounty" or "grant" which is sufficiently well-defined to pro-

123. United States v. Hammond Lead Products, Inc., 440 F.2d 1024, 1031(C.C.P.A. 1971).

124. Brief for the United States in Opposition at 7-8, Zenith Radio Corp. v. UnitedStates, 98 S. Ct. 2441 (1978).

125. King, supra note 40, at 1192.126. Rosendahl, supra note 53, at 122.127. 562 F.2d at 1217.

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vide guidance for potential complainants as well as to review-ing courts.

Most significant in Zenith is the lack of evidence in thelanguage of the statute, or in eighty years of legislative history,judicial review, and administrative practice, that could con-vince the Court that the broad powers of countervailing dutydeterminations should not be left to Treasury discretion.Holding that the Treasury policy is "lawfully permissible"under the statute is little more than saying that this discre-tionary power has been reasonably exercised. The Congress,long aware of the Treasury practices, has made no effort tooverrule them. The Treasury practice is also compatible withthe GATT system. The Zenith decision merely adds thejudicial imprimatur to the Treasury policy.

In so doing, the Court puts the countervailing duties prob-lem in a broad international perspective. Countervailing dutiescome to us from the late 19th century, a time when protectivetariffs were commonplace and retaliatory legislation was thefirst response called for by U.S. industries, particularly a nas-cent one as was the sugar industry at the turn of the century.Similarly, massive imports of highly competitive Japanese con-sumer electronic goods had the U.S. industry reeling in theearly 1970's. Continuing problems of a similar nature requireconstant bilateral negotiations at the highest executive levelbetween the United States and Japan. The Zenith decision,more than just another comment on Downs, lends judicialbacking to the Secretary's attempts to balance the anger ofdomestic industry against the export necessities of a majortrading partner and ally. The Court's decision minimizes theeffect an arbitrary standard might have on world trade andcontinues the discretionary license the Treasury has exercisedsince the creation of the statute.

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hard times for bounty hunters: zenith radio corporation v

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